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Czech public debt up CZK 205 billion in nine months, ministry says

Czech public debt rises by another CZK 205 billion in nine months
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Since the start of the year, Czech public debt has risen by CZK 205 billion in nine months. According to the Ministry of Finance, the main reason is the sale of government bonds to cover debt payments and the ongoing financing of the budget deficit. At the end of September the deficit stood at CZK 194.5 billion.

According to the July update of the strategy for financing and managing public debt, the debt is expected to grow to CZK 3.991 trillion by the end of the year, with the debt burden reaching 44.4 percent of GDP.

Net debt servicing costs in the first three quarters came to CZK 74 billion. Over the whole year, the ministry estimates they will reach CZK 110 billion, after CZK 98.1 billion last year. Costs are rising in line with the size of the debt and because of the global rise in government bond yields.

The average maturity of Czech government securities is 6.2 years, close to the ministry’s strategic target of 6.5 years. About two fifths of the bonds are held by domestic banks and around 28 percent by foreign investors. Czech households account for five percent; their share rose after the July issue of “Republic Bonds” and stood at 3.1 percent at the end of the first half.

Public debt consists of government debts and arises primarily from the accumulation of state budget deficits. It is financed through treasury bills, government bonds, direct loans or loans from the European Investment Bank.

Around Prague, based on reporting by novinky.cz

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